Question

What cost term best fits the following​ descriptions? Choose from the following list of​ terms: direct​ cost, indirect​ cost, cost​ object, trace,​ allocate, and assign. Terms may be used more than once.

What cost ter best fits the following descriptions? Choose from the folowing list of terms: direct cost, indirect cost cost object, trace, alocate, and assign. Terms may be used more than once cost object direct cost assign indirectos allocate Anything for which a manager would like to know the cost A cost that can be traced to a cost object C. A general term for attaching any type of cost to a cost object d. A cost that is related to a cost object, but can't be traced to it The method of assigning costs that results in a los precise cost figure A cost that is readily associated with a cost object The specific term for attaching a direct cost with a cost object The specific term for attaching an Indirect cost with a cost object A cost that is only used or shared by several cost objects The method of assigning costs that results in a very precise cost figure Whether a cost is direct or indirect depends on this + direct cost trace h alocate cost objed

Answer 1

a. Anything for which a manager would like to know the cost : COST OBJECT - it is some manufacturing activity either products or services to which costs to be assigned.It is anything for which company plans to compute costs separately.

b. A cost that can be traced to a cost object : DIRECT COST - these are directly attributable to a particular product , production process or service of a specific cost centre or cost object. Direct costs are often known as variable costs.

c. A general term for attacing any type of cost to a cost object : ASSIGN - assignment of costs to various cost centres or cost objects is a phase before cost allocation, it refers to alloting of costs to various activities which is due cause for incurrence of costs, it is heavily used in activity-based costing.

d. A cost that is related to a cost object, but can't be traced to it : INDIRECT COST - these are costs which are not directly identifiable , these may be both fixed as well as variable costs. Indirect costs are costs used by many activities therefore difficult to assign them to specific cost object.

e. The method of assigning costs that results in a less precise cost figure : ALLOCATE - it is the process of assigning costs to various cost objects such as departments, products etc.,in a company. Cost allocation helps to identify the specific cost object that are making profits or losses for the company, it even assists in decision making processes.

f. A cost that is readily associated with a cost object : DIRECT COST - these are easy to determine and identify and can be assigned to a cost object easily.

g. The specific term for attaching a direct cost with a cost object : TRACE - it is the assignment of accumulated costs that have direct relationship to a specific cost object which is most often accomplished by physical observation.

h. The specific term for attaching an indirect cost with a cost object : ALLOCATE - indirect costs are those costs that cannot be linked to a specific object or process directly, these costs will be split up since they are not tied to the specific cost object. These can be allocated through proportional allocation and cost rate allocation.

i. A cost that is jointly used or shared by several cost objects : COMMON COST - these are costs which are incurred for more than one product, job etc, and are used jointly and shared by several costing objects. These are not easily idenfiable and hence has to be apportioned.

j. The method of assigning costs that results in a very precise cost figure : ALLOCATE

k. Whether a cost is direct or indirect depends on its : COST OBJECT - cost object is any item for which costs are being separately measured, it is a task to find the cost to a cost objects.